One year after Japan's great Tohoku earthquake, tsunami and Fukushima nuclear power plant disaster, the country is in an energy crisis. Since the accident, all but two of Japan’s 54 nuclear reactors, which supplied 30 percent of the country’s power, have been shut down. The country has responded with emergency curtailment measures that have left office buildings sweltering during summer afternoons, factories curtailing production to avoid blackouts, and lights darkened at great displays of Japanese prosperity like Tokyo's Ginza shopping district.
The crisis has spurred increased imports of liquefied natural gas (LNG) to run the turbines Japan needs to replace baseload nuclear power. But with no fossil fuel reserves of its own, Japan is desperate to secure its own energy future -- and green energy could be the ticket. We’ve seen Japanese industrial giants announce plans for hundreds of megawatts of new solar and wind power projects, and the government has introduced a feed-in tariff, set to start in July 2012, that analysts predict will offer a very generous 50 cents per kilowatt-hour for solar PV power and about 25 cents per kilowatt-hour for wind power.
All that new green power will require a massive investment in smart grid technology to manage it. That means that, after years of relatively slow investment in the sector, Japan’s smart grid market is set to explode -- and the Fukushima disaster has only accelerated that process.
ZPryme Research predicts Japan’s smart grid market will boom from $1 billion to $7.4 billion between 2011 and 2016, an annual growth rate of 63.8 percent. That adds up to $1.7 trillion over the next five years, much of it tied up in deploying the transmission and distribution infrastructure needed to repair damage from last year's disaster and bring lots of new wind and solar power online. Marketing firm Fuji Keizai predicts the domestic market for smart meters and other grid devices could grow more than five-fold over the next decade, reaching ¥491.3 billion ($5.9 billion) in 2020.
ABB, IBM, General Electric, Itron, Elster and Echelon are among the international grid giants targeting the market. We’ve already seen Tokyo Electric Power (TEPCO) announce plans for a ¥200 billion ($2.6 billion), 17-million smart meter deployment, under government mandate. The massive utility, which was responsible for Fukushima, is in the midst of a restructuring that could amount to a government takeover, and hopes its smart meter network could cut costs by $1.3 billion over the next 10 years. It hasn’t picked its vendors yet, however.
The Smart City as Microgrid
At the same time, Japanese industrial giants are fast-forwarding projects that ask solar panels, plug-in electric cars, smart refrigerators and hot water heaters and other household devices -- as well as a willing Japanese public -- to balance power use across neighborhoods, cities and entire regions.
Japan has launched four Smart City Projects around the country, enlisting homegrown giants like Toshiba, Fuji Electric, Hitachi, Panasonic, Mitsui and Osaki Electric, as well as international players like General Electric and Accenture. Japan is actually somewhat late to this game, compared to neighbor South Korea, as well as the United States and Europe, where dozens of these types of integrated, neighborhood-side energy management technologies are being tested.
But Japan’s smart cities have an additional task, driven by the imperatives of the country’s shaky power supply: they have to be able to run on their own power most of the time. For example, the Fujisawa Sustainable Smart Town (SST) project, a 1,000-home green-field development, has a goal of making the entire community self-sufficient 70 percent to 80 percent of the time, and even put power back into the grid if needed, Peter Fannon, vice president of technology policy for Panasonic in North America, said.
Panasonic, which Fannon called the Johnson Controls of Japan, is bringing its building energy management and efficiency technology to the project, as well as its integrated residential line, which includes everything from home fuel cells and smart appliances to actually building homes with green and recycled materials via its PanaHome business.
At the same time, Panasonic’s acquisition of Sanyo has given it solar power and energy storage technologies to bring to the table, Fannon said in a February interview. The company intends to replicate its SST model as a business in other parts of Japan and overseas, he added. It’s already working on several such projects, including the University of California at San Diego’s stimulus grant-backed microgrid project.
It’s not alone. Toshiba, which bought meter giant Landis+Gyr last year, is extending its existing strengths in generation, power grid and, yes, nuclear technologies into smart grid networks and integration work overseas. It’s planning a smart city project in Ibaraki, a town near Osaka, as well as in Stratford, Conn. in the United States.
Hitachi, another Japanese smart grid leader, has also been working with Panasonic on integrating their respective home energy management and community energy management platforms. It’s been doing work in Japan, as well as in Hawaii in a joint U.S.-Japanese smart grid project, and recently invested $30 million into Silver Spring Networks, the smart grid networking startup and Hawaii project partner. Mitsubishi is working on a series of smart grid/smart building projects in Japan, aimed at testing a combination of technologies’ ability to balance power use and generation capacity.
Big Batteries and Plug-In Cars for Energy Storage
Japan is already a quiet leader in wind power energy storage, with more than 100 megawatts of sodium-sulfur batteries from NGK, which holds a monopoly on the high-temperature, industrial-scale technology. But the post-Fukushima power crisis has also pushed it to seek out other sources of energy storage, whether they’re hot water heaters or the plug-in hybrid in the garage.
Panasonic happens to be including both forms of energy storage in its Fujisawa plans, Fannon said. Toyota is planning to build 67 solar-powered model homes that manage electricity consumption and tap into weather forecasts, using battery units from Toyota affiliate Denso Corp. Mitsubishi has rushed to market a system that allows i-MiEV owners to tap the EV’s battery for home power backup, and Nissan is testing out a system that stores solar power in the batteries of parked Leaf EVs.
Of course, so-called vehicle-to-grid networks lack the volume of battery-powered cars to prove whether or not they can make a significant difference to the smart grid -- but a power-constrained Japan seems one of the most likely spots for the technology to reach grid-parity earliest. Likewise, lithium-ion battery makers such as Panasonic and GS Yuasa are bringing building-scale energy storage systems out to market in Japan, possibly at prices that wouldn’t be supported elsewhere.